Open Enrollment Equals Massive Confusion

By: Randy Dotinga

Editor’s note: This is the second in a two-part series about health-care costs at newspapers.

Think your 401(k) is complicated? Just wait until an open enrollment form lands on your desk over the next few weeks. Newspapers, like other American companies, are expanding health insurance options and bewildering employees more than ever.

Unfortunately, there’s no easy way to swim through the alphabet soup of HMOs, PPOs, POSes, HRAs and various variations.

The Register-Guard of Eugene, Ore., tries to make things simple by creating a spreadsheet explaining the various offerings, but employees still beg the folks in the personnel office to just tell them what to do, said Cynthia Walden, director of human resources. “They’ll ask, ‘Which one would be best for me?'”

Bad move! The key to making the right choice is taking the time to do research. Poor decisions, including reliance on someone else or misjudgments about the true state of your family’s health, could cost you.

The first thing to do is to figure out your general health expenses over the past few years outside of premiums. If you’ve been part of a preferred provider organization, this may be fairly easy since you will have paid a portion — perhaps 20% — of your bills. HMO members could have a tougher time, since they typically only shell out for co-pays.

Then, take a look at the future. Do you expect any major medical expenses? Is someone pregnant, suffering from a chronic illness or anticipating surgery? Are you attached to your doctors or willing to go to new ones for lower premiums? Can you afford sharing the costs of medical care in case of a catastrophe?

Health Maintenance Organizations (HMOs) are a common option, especially in states like California where they’re engrained in the fabric of the insurance industry. But they’re hardly as popular as they used to be — some being victims of poor management, bad press and a failure to keep expenses down.

Even so, HMOs often work for people who don’t want to cope with deductibles or paying a specific chunk of their medical bills, said Cara Jareb, health benefits consultant with the Watson Wyatt consulting firm in Washington.

“A lot of them pay benefits at 100%,” Jareb said. “People like knowing that they have to pay $15 or $20 as a co-pay. That works well for them.”

Families with young children often turn to HMOs because they like the array of preventive-care options, she said. “Obviously the drawback is that in many cases you don’t have out-of-network coverage,” she said. “If you don’t see providers in the HMO [that you prefer to use], you’re out of luck.”

As HMOs come under fire, Preferred Provider Organizations (PPOs) are making a comeback, according to Rusty Besancenez, senior benefit consultant with St. Louis-based Mercer Human Resource Consulting, which advises the Pulitzer Newspapers chain. “Over the last few years, there’s been an uproar about the restrictions of HMO benefits and lack of flexibility in an HMO environment,” he said.

However, the idea of sharing the cost of health may not appeal to those with high medical expenses, especially those who aren’t too concerned about the right to pay extra to see out-of-network doctors.

Meanwhile, Point-of-Service (POS) plans, which also allow access to non-network doctors, are struggling as companies look at them skeptically, Jareb said. “The cost savings haven’t been any more significant than in a PPO, but there’s a lot more administrative hoops that you have to go through to see a specialist.” In response, the plans are making their rules less restrictive, Jareb said.

The newest major health plan option, the “consumer-driven” or health reimbursement account plan, is available at some newspapers. Typically, the plan pays for the first $1,000 in medical expenses, then the employee pitches in the next $500 or $1,000. Then the plan switches to a shared expense arrangement.

Finally, employees can take advantage of federal medical savings accounts, which allow them to put aside pre-tax money for health expenses. The use-it-or-lose-it aspects of the accounts scare some people away, although new laws expand the list of medications and supplies that you can buy.

Are you completely confused? It may get worse. Jareb said she’s seen a plan that allows employees to change their premiums by setting their own co-pay levels. “Something like that may be really overwhelming for people,” she said. In fact, it may cause enough stress to send people to the doctor — if they can only figure out how to pay the bill.

Our advice? Carefully review the materials provided by your human resources department. And don’t be afraid to ask questions about how the plans work or the advantages and disadvantages of each. Just don’t expect an easy answer, or expect someone else to make such an important decision for you. Take the time to learn about the options, so that you can choose the best plan for you and your family. It’s your life, after all!

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